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eligible employees. For these plans, though, you need to establish a vesting schedule, which will allow you to phase your employees into the plan over time.

For example, you participate in your company’s profit-sharing plan. After two years there, you decide that it would be best if you were to find another job. Because of your company’s vesting schedule, you may only be able to take a portion of your profit- sharing plan with you; typically after two years it would be 40 per- cent. You are always able to take 100 percent of your contribution. The 40 percent only refers to the employer’s contribution. Gener- ally, after five years of participation, an employee is 100-percent vested and would be able to take all of the proceeds from the plan and roll it over into another plan. Vesting schedules often work as a deterrent for employees who may be prone to frequent job switching.

Money-Purchase Plans These plans are also part of the Keogh plans and can be set up sep- arately. The difference between the profit-sharing and money-pur- chase plans is that employers need to establish a set percentage of the payroll that will be deposited into this account. These plans are rigid and don’t allow for any flexibility. While your employer may be able to deposit up to 25 percent of payroll, whatever he chooses he needs to stick with. Therefore, if he decides that he will con- tribute 20 percent of payroll, then he will continue contributing 20 percent. The maximum annual contribution that an employee can receive is the lesser of 100 percent of salary or $40,000.

Annuities Annuities are a great tax shelter because there is no limit to the amount of money you can invest in an annuity during a given year. However, there is no tax write-off for this investment. The money simply grows on a tax-deferred basis until you annuitize the account. Plus, within variable annuities you can switch between the different annuity sub- accounts at no cost and without triggering any type of taxes.

I regularly recommend annuities to clients who would benefit from tax-deferred growth of their money. I once read an investment

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